Tesla’s Stock Decline and Retail Enthusiasm
(Bloomberg) — Tesla Inc.’s stock is currently experiencing a significant downturn. Sales are decreasing globally, leading to a shift in sentiment among even the most optimistic analysts on Wall Street. Nevertheless, a notable group of investors—fans of CEO Elon Musk—are purchasing the electric vehicle maker’s shares at unprecedented levels.
Strong Retail Investor Support
Tesla has cultivated a dedicated following of individual investors who closely follow Musk’s updates on X, the social media platform he owns. This community actively analyzes Tesla’s performance in online discussions and largely serves as a promotional force for the company’s stock.
Record Inflows Amid Price Decline
Currently, the enthusiasm among retail investors is remarkably high, even compared to recent trends. According to JPMorgan Chase’s equity derivatives strategist Emma Wu, individual investors have bought more Tesla shares than ever before, with $8 billion in net purchases over the past 13 sessions. This surge represents the largest influx during any buying streak since 2015, despite Tesla’s stock price falling 17% during the same period, erasing over $155 billion in market value.
Investor Sentiment on Online Platforms
As noted in discussions on Reddit and other trading forums, many investors see the current drop as an opportunity. One post remarked on the chance to invest now that shares are lower, while another expressed satisfaction with buying in at a price range of $225 to $230. The stock closed up 5.3% at $248.66 on Friday.
Historical Context of Tesla’s Stock
Tesla shares have been on a downward trajectory since mid-December, when they reached an all-time high, largely driven by optimism surrounding Donald Trump’s election. Since then, the stock has plummeted by more than 50%, making it one of the biggest decliners in the S&P 500 Index this year. The downturn was so severe that Musk held a company-wide meeting to reassure employees, which likely contributed to the stock’s rebound on Friday.
Challenges in Global Markets
Challenges have increased for Tesla in major European markets, including France and Germany, as well as in China and Australia. While global sales figures will be released next month, analysts are already lowering their expectations for sales and profits, attributing the decline to negative market sentiment and heightened competition. Morgan Stanley analyst Adam Jonas has adjusted his price target and sales forecasts while maintaining a buy-equivalent rating, suggesting that the company’s potential in robotics and AI could mitigate short-term concerns.
Future Outlook and Investor Beliefs
Analysts like Wedbush’s Daniel Ives have praised Musk for his support of employees and investors during this turbulent period. They argue that if he continues to focus on his vision, Tesla’s stock could benefit significantly from advancements in autonomous technology and robotics. This prospect is likely contributing to the ongoing enthusiasm from retail traders, who prioritize belief in Musk’s vision over traditional valuation metrics, according to Colas.
